iPhones are best-sellers, but they are also expensive relative to other phones. To get those more budget-conscious buyers, Apple is rumored to be developing a smaller, cheaper version.

Bloomberg reports that Apple is considering the possibility of creating what is essentially an iPhone Nano. A third smaller than the iPhone 4, this smaller device would, at $200 and without a contract, be a major pull for those gravitating to cheaper Android phones.

According to the Bloomberg story's sources, cheaper component prices are what will allow Apple to sell the smaller iPhone at a lower price.

Bloomberg also reports that future iPhones will likely feature technology allowing the phones to be used on multiple networks, a feature that some speculate the Verizon iPhone's Qualcomm chip already has. This technology would let Apple to create a single iPhone that can run on the networks of both Verizon and AT&T.

Calls to Apple for comment were not returned.

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